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Remember: strictly speaking 2.0% isn't the target but the ceiling.
by IM on Thu May 29th, 2014 at 12:32:36 PM EST
[ Parent ]
So -2% is OK?
by afew (afew(a in a circle)eurotrib_dot_com) on Thu May 29th, 2014 at 12:41:10 PM EST
[ Parent ]
ECB: Monetary Policy
The primary objective of the ECB's monetary policy is to maintain price stability. The ECB aims at inflation rates of below, but close to, 2% over the medium term.

I'd say target is more accurate.

by generic on Thu May 29th, 2014 at 12:46:35 PM EST
[ Parent ]
true but "below". 1.8% is good, 2.3% not.
by IM on Thu May 29th, 2014 at 12:47:43 PM EST
[ Parent ]
Even to replace the 2% "target/ceiling" with a 2% 5 year moving average would be a major advance, as it would force more reflationary policy after consistently undershooting the target for some years.

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Thu May 29th, 2014 at 04:02:36 PM EST
[ Parent ]
No, that would be a bad idea, as it would force meritless contractionary policy after overshooting.

Last year's inflation is water under the bridge.

Now, if your inflation rate systematically undershoots during slumps, and systematically overshoots during booms, then it would indicate that you need more fiscal policy in your policy mix - because fiscal policy works directly on the real economy, while interest rate policy works only at one remove, if at all.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri May 30th, 2014 at 05:53:14 AM EST
[ Parent ]
1.8% is good, 2.3% not.
And when you get 0.8% you redefine "the medium term" to mean "the medium to long term".

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Carrie (migeru at eurotrib dot com) on Thu May 29th, 2014 at 04:05:34 PM EST
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I don't agree. Below but close to 2% means 1.9999...%. And then you have a band around that where you want to be, the closer to the middle of the band the better, say 0.9999...% to 2.9999...%.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Fri May 30th, 2014 at 02:40:56 AM EST
[ Parent ]


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